Posts Tagged ‘Sell Gold’

Raising the price of gold is the easiest way to get inflation. A higher dollar price for gold is practically the definition of inflation. Governments can do this in a heartbeat. The Fed would just declare the price of gold to be, say, $5,000 an ounce & make the price stick using the gold in Fort Knox & their printing press to maintain a two-way market. If you don’t believe this can happen, just check the history books.

Fed rate hikes have, on average, seen much stronger gold gains than a cut, and more frequently, too. Seen against the last 30 years of data, gold is anticipating a major shock from Wednesday’s announcement. If the bond and futures markets prove right instead, and the Fed delays again, the turnaround in gold bullion could be swift.

The turning point appears to have been the downturn in oil prices as traders began to hedge their counterparty risk in massive levered derivative positions tied to commodities. And it is not just banks… we suspect so is COMEX’s…The ‘claims per ounce of gold’ deliverable at current prices has spiked higher once again, to 126:1.

Some argue that the 2011 peak of $1,921 is the equivalent of the 1970s mania peak of $850 in Jan of 1980. Today’s volatile world is exactly the kind of circumstance gold is best for. Regardless of the measure, gold has not matched its 1980 peak. And the reasons to own it have not faded. Indeed, they have grown.

It’s starting to feel like we are part of a giant poker game against the US government, whose hand is the true condition (unknown to us) of the American economy – So, who should investors believe about gold? Should one hold it or fold it?